Multilevel study finds no link between minimum wage and crime rates

November 18, 2013
by Dawn Fuller

A new study out of the University of Cincinnati is a unique examination into whether public policy on the minimum wage can affect the crime rate. The study finds that, contrary to conventional belief, increasing the minimum wage will not lower violent crime or property crime. Derek Cohen, an analyst for the Texas Public Policy Foundation and PhD candidate from the nationally top-ranked University of Cincinnati criminal justice program, along with Jay Kennedy, also a doctoral candidate in the UC criminal justice program, and Scott Dannemiller, a UC senior and undergraduate research assistant in the criminal justice program, will present their findings on Nov. 21, at the American Society of Criminology's 69th annual meeting in Atlanta.

The researchers studied official U.S. crime data and economic data from 1977 to 2012 to compare violent crime and property crime rates among states that abided only by the federal minimum wage standards, and the 18 states that had raised their minimum wage requirement at one time or another above the federal mandate.

The minimum wage data came from the U.S. Department of Labor. Researchers also reviewed data from the Consumer Price Index, while state crime data was pulled from the F.B.I.'s Unified Crime Reporting (UCR) program, which holds statistics from law enforcement agencies around the nation.

The researchers were examining the effect on property and crime rates in regard to changes in minimum wage and the Consumer Price Index. Introducing the Consumer Price Index into the analysis factored in purchasing power – comparing ability to buy goods with what was coming home in a paycheck.

"We were looking at whether we could see a crime trend that moved over time in regard to what we call 'shocks,' changes in policy," explains Cohen. "These shocks impart change, so if there's a trend, the rate-of-change-of-crime should increase or decrease, but ultimately, among the 18 states that had raised the minimum wage, there was no significant change – in this speculation – a drop, in violent crime and property crime. If raising the minimum wage is meant to impart a change in crime rates, we should have seen a more pronounced deterrent from crime."

Among the other states that adhered to just the federal minimum wage-set salary, the researchers saw the same pattern. There was no discernible effect for any sort of minimum wage policy, says Cohen.

Researchers used a technique of econometric time series analysis called the autoregressive integrated-moving average (ARIMA) to analyze the large aggregate datasets. The approach allowed researchers to identify variation between states that raised minimum wage beyond the federal standards and states that had stayed with only the federal minimum wage increase.

Based on the analysis, the researchers concluded that crime is fundamentally an individual-level phenomenon; that scholarship on the topic suggests that state-level policy effects are very marginal; and that conceptually, proper specification of a direct-effects model (as a cause or insulator) is likely impossible.

"Minimum wage legislation is divisively political; theoretically, a pure, strong- to strictly-causal model also is impossible," state the researchers.

"Very few researchers are examining this issue from a macro level," says Cohen. "It's a macro level issue that is being thrust into public policy, often under claims of crime prevention, without the justification to do so."

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Ahhh Pfuiii! All kinds of criminals have jobs, else why are quiet worms in the system like the fictional 'Penny Waist' arrested for embezzling, and actually taking large aggregate amounts over years of quiet parasitism. Else how are the fictional 'George's accumulating full workshops of expensive tools...that they had stolen over years from their employers, part by part. The primary is that criminals do not accept minimum wage jobs, but occasionally. The minimum wage job for a criminal is usually: to comply with a court order to 'stay employed'; to work for a specific sweat shop in the south on order of a crooked sheriff; to give the 'worker' access to expensive 'merchandise' to 'supplement his pay'; and to provide a cover for the 'worker' in the day who is a 'cat burglar' at nite; to give a prostitute access to 'prospects' while working as a waitress for chump change; etc. Use your imagination!!

Hmmm.... It seems that they were specifically looking at violent crime and property crime. Would that include in some way drug crime?

My other question pertains to the value of the increase. Is it a significant increase against the federal minimum? Perhaps it is my ignorance but I'd not have expected a 1:1 ratio. In fact I'd expect a very large increase in wage before you see a small effect in crime.

Mostly though I support higher minimum wages* relative to current, not for the individuals directly receiving the payment but the dependence relying on minimum wage individuals. It is frustrating to me that 60 odd years ago you could support a family on a single wage, yet today it is quite the struggle. Not that the poor had it easy half a century ago.

* USA wage standards aren't familiar to me, being an Australian. So please forgive and correct me if I've blundered across cultural differences.

It is frustrating to me that 60 odd years ago you could support a family on a single wage,

60 years ago in oz.

No microwave ovens.No electric washing machines.Lucky if you had one TV.No air con.No computers.Hot showers a rarity.Maybe an outside dunny and your fresh meat a couple of times a week from a rabbitoh.

Times changed and people wanted more. So .. You work more. The wife works, the kids get work early in life and hey presto ... Modern convenience.

It's not forced. You can choose to live like 60 years ago. Just don't expect quite as much consumer comforts.

Except people 60 years had equivalent standards of 'stuff' to their peers on equivalent wages. Their grandparents were telling them they didn't need all this 'stuff'. Prices came down and people could buy more for the equivalent value.

Don't worry about me, we can live on my wage and my wife earns more than I do; way more. But I've come from a background of doing what you suggest and the village that raised me aren't any better off than those that had everything on an equivalent wage. Plenty of people, the real working class, are doing what you say and they (actually their dependents) are just getting more and more disadvantaged. It isn't working.

There is an economic inequality but it isn't because the middle class bought more stuff. That is the same kind of lie that says 'work harder to get ahead.' If that were the case, cleaners would be the most valued people in society. It is one of the 'big lies' societies tell themselves to keep the peasants in their place.

It is frustrating to me that 60 odd years ago you could support a family on a single wage, yet today it is quite the struggle. Not that the poor had it easy half a century ago.

* USA wage standards aren't familiar to me, being an Australian. So please forgive and correct me if I've blundered across cultural differences.

60 years ago the average effective tax rate was 3%. Other studies have shown that often the second earner's wages just about offset the taxes today.

In addition, the vast majority of those earning the minimum wage are teenagers, and people with second jobs, and there are very few primary earners trying to make it on minimum wage for themselves, let alone with a family.

The black teenage unemployment rate in the US is over 50%. Want to see it go to 75% or more? Double the minimum wage - there already are companies marketing automated burger flippers and counter workers.

Let me remind you that in modern Australia we have tax breaks to assist low income households with dependents. Effectively meaning the first 18000 dollars or so of family income is tax free. Then you can also have Family Tax Benefits amounting to at least 10000 dollars a year in the form of cash. Free access to medical help with Medicare and subsidised medicines. Education and vocational training is free to low income housholds. The list goes on. So I cannot imagine what makes you or your village so disadvantaged. Problem in Australia is too many handouts that discourage getting a job. Perhaps your village is drug or alcohol dependent or a bunch of lazy layabouts. A girl I know works hard as a cleaner and makes a motza. What are your lot doing wrong?

Really? I was under the impression that in the USA the wealthy and companies had much higher taxes which brought the average tax rate to not much lower than the average now. Can't say I've seen wage earners isolated in various income debates

Hmmm. I don't know the percentages, but [anecdotes warning!] I know a few families trying to survive on minimum wages. I don't know anyone trying to do it on a single minimum wage.

I think the automation is happening anyway* and the minimum wage has little to do with its development. Its uptake among small businesses, maybe. And I don't think it needs to be a bad thing, despite that being where we are currently headed.

Anyway, I'm more curious about the article so sorry for taking the comments off track.* No, I don't believe in the "Singularity" as such.

Bluehigh, that was precisely what I didn't say. Well done :rolls eyes:

The only cleaners I know making 'a motza' are working for mining companies and aren't working that hard. Outside of that they are all close to retirement or second incomes to support a low wage earner.

My lot? Living in rural Australia. Yes a significant portion have moved to get the benefits of education and continue to due to the very pressures I spoke of earlier. That in itself is evidence of the problem. As far as your other proxy insults, I'd be happy to put them up against your cleaner girl day in day out and would be shocked if they couldn't keep up. Me on the other hand would be lucky to keep up for half a day. I'm lazy because they work so hard and get nowhere.

& don't mistake struggling to survive for unhappy. The majority of my unskilled workers are reluctant to move because they are happy and like it where they are. But the reality is they can't live on their minimum wages and raise their kids.

Australian National minimum wage is 622.20p/w gross and with dependants you pay about 82 in tax including the Medicare levy. Say, 540 a week net. FTB adds at least 250 cash each week (paid fortnightly).

So 790 net a week in the pocket plus whatever second income the partner gets. Even after accommodation expenses (outside of a main city) together with the previously mentioned freebies just what do these people you claim to know, do with their money?

These poor people should have at least a few hundred dollars disposable income each week. What problem? Sure is not mountains of dosh but easy to live with and even save some.

The cleaners you mention seem to me like a bunch of semi-retired whiners waiting for their quarter million dollar superannuation payout.

Let me guess. Down the local a few times a week to feed the pokies. A couple of slabs of beer or rot gut wine a week. A carton of ciggies or perhaps even a bag of pot. Takeaway junk food every second day and guess what ... Poverty comes to visit.

Blue High - Times changed and people wanted more. So .. You work more. The wife works, the kids get work early in life and hey presto ..."

Presto, latch key kids with no effective parenting being raised part time by the school system and part time by the self amplifying values of the street, and it's sensationalized Media depiction on TV, Movies and Video Games, resulting in ever growing rates of illiteracy, idiocy, violence and the eventual decoherence of society.